As campaigning for the U.S. presidential elections enters its home stretch and concerns about the Chinese economy deepen after weak trade data last week, risk aversion is broadly on the rise forcing investors to cut positions after a strong rally in risky assets in the third quarter of 2016.

Daily portfolio flows to emerging markets declined sharply last week with the seven-day moving average declining to its lowest level since a surprise Chinese currency devaluation in August 2015, according to flows data from Institute of International Finance.

Adding to the headwinds for emerging markets is the growing likelihood of a U.S. rate increase in December which has lifted 10-year U.S. treasury yields up by 25 basis points so far this month and boosted the dollar.

"Despite the `lower for longer` rhetoric, the expected case for a December rate hike remains on course, yet given the division in the FOMC it is far from done," said Stephen Innes, a senior trader at FX broker OANDA, referring to the U.S. central bank`s Federal Open Market Committee.

Stocks moved lower after comments from Federal Reserve Vice Chairman Stanley Fischer, who said economic stability could be threatened by low interest rates, but it was "not that simple" for the Fed to raise rates.